Renting out investment properties can be exciting. Not only can you get an additional source of income, but it allows us to build a solid rental portfolio.

There are many aspects necessary to be a successful homeowner, it is important to establish your rental properties as a limited liability company or better known as an LLC company in the United States.

Renting property is your business, and it should be treated as such. Count on customers (your tenants), income (monthly rents) and expenses (insurance, taxes, utilities, etc.). you, the owner, are the CEO of your business.

As the name implies, the great legal benefit of an LLC is that it provides liability protection to the owners, meaning that they are not personally liable for any lawsuits that are brought to the corporation. It is this who is responsible.

Rental Business – Investment Properties

Property owners should keep excellent records regarding basic costs, income, and expenses.

As a homeowner, here are the things you need to keep track of:

  • The purchase price of the property
  • Rental income. (Rental Agreement)
  • Security deposits.

In addition, you’ll need to keep track of various expenses associated with your rental property, including:

  • Property management commissions or fees.
  • Advertising expenses.
  • Cleaning, maintenance, and repair costs.
  • Homeowners Insurance and Condo Management Fees
  • Real estate taxes and interest expenses on the mortgage.
  • Security deposits refunded to the tenant.
  • And other expenses, such as utilities, gardening, garbage, and so on.

Rental Property Sales

The formula for calculating the basis of costs in renting the property is as follows:

  • Purchase Price
  • +Purchase expenses such as: title, deed expenses, commissions of real estate agents, etc.
  • + Improvements such as: Change of floors, remodeling, new oven, etc.
  • + Costs of Sale such as: title, property transfer expenses, commissions of real estate agents, etc.
  • -Accumulated Depreciation (as reported in the form of tax)
  • = Base cost

If you are going to acquire several properties, it may be convenient for you to put two or three properties under the same LLC for convenience and cost of management. The downside is that a litigious tenant could theoretically go after all of your properties. This will also depend on the value of the properties and the risk that the investor is willing to have.

The Limited Liability Company (LLC) has become a powerful tool for achieving many of the asset protection goals. LLC is the most versatile and convenient strategy for owning rental property, protecting assets, running a business, and achieving an excellent level of privacy.

Also at the time of making the sale, the owner is a foreign natural person, at the time of the sale he will have to go through a tax process which can be abolished by having the property as an LLC.

Having an income in dollars where the tenant monthly gives us an income has become a very good source of income and protection of dollarized capital investments.

At PFS Realty they advise you throughout the purchase process, get the tenant, do the monthly management of the property and contact you with accountants who can help you ensure that the tax aspects are in accordance with the law.

Learn about the home rental options in Miami that exist right now